Economic & Demographic Indicators for 3 Shale Plays: Barnett, Fayettville & Marcellus

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An update to a study originally published in 2008. This new study (2012), titled "Selected Economic & Demographic Indicators in Particular Counties in the Barnett, Fayetteville and Marcellus Shale …

An update to a study originally published in 2008. This new study (2012), titled "Selected Economic & Demographic Indicators in Particular Counties in the Barnett, Fayetteville and Marcellus Shale Play" is published by a consortia of colleges in northeastern Pennsylvania called the Institute for Public Policy and Economic Development. The data show the dramatic impact shale gas drilling has had in NE PA on employment and median income. It also shows counties where drilling does not happen have far less of an impact (no surprise there).

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  • 1. A Review of Changes in Selected Economic & DemographicIndicators in Particular Counties in the Barnett, Fayetteville and Marcellus Shale Play An Update to The Institute’s 2008 Economic Impact Report on the 10th Congressional DistrictA partnership among Keystone College, King’s College, Luzerne County Community College, Misericordia University, Penn State Wilkes-Barre, University of Scranton, and Wilkes University 7 SOUTH MAIN STREET, SUITE 201 WILKES-BARRE, PA 18701 570.408.9850 120 WYOMING AVENUE, 3RD FLOOR SCRANTON, PA 18503 570.207.0340 www.institutepa.org info@institutepa.org
  • 2. TABLE OF CONTENTSEXECUTIVE SUMMARY ........................................................................................................................................... 3INTRODUCTION ..................................................................................................................................................... 4RESEARCH METHODS & LIMITATIONS.................................................................................................................... 4CASE STUDY: BARNETT SHALE & DENTON COUNTY, TEXAS ................................................................................... 6CASE STUDY: FAYETTEVILLE SHALE & FAULKNER COUNTY, ARKANSAS / WHITE COUNTY, ARKANSAS ................. 12IMPACT ON NORTHEASTERN PENNSYLVANIA ...................................................................................................... 19CONCLUSION ....................................................................................................................................................... 27This research was completed with support from Wilkes University’s Institutefor Energy and Environmental Research (IEER) through a grant from theU.S. Department of Energy’s National Energy Technology Laboratory (NETL) andURS Corporation. 2|Page
  • 3. Executive SummaryFor decades, Northeastern Pennsylvania (10th Congressional District) has endured modest economicconditions; however, the region may soon experience much needed industry revitalization. In recentyears, NEPA’s population has increased due to strengthened business activity and rising housing prices -a growth gone unobserved for 60 years. While there are various reasons that could contribute to suchgrowth, it seems that the Marcellus Shale formation is the prime suspect in this situation.The nation’s natural gas industry is rapidly increasing. In 2009, the U.S. produced 3,110 billion cubic feet(BCF) of natural gas from shale - an increase of nearly 1,820 Bcf since 2007. Between 2007 and 2010,shale gas production rose from just 1 Bcf to 365 Bcf.1 This massive production increase is a trend that isexpected to continue for years to come.2 The U.S. Energy Department estimates that there is 141 trillioncubic feet (Tcf) of gas in the Marcellus Shale formation. As a whole, the U.S. produces about 20 Tcf ofnatural gas per year.In 2008, The Institute for Public Policy and Economic Development released a study describing thepotential impact the shale formation, or “play,” could have on the economy of Pennsylvania’s 10thCongressional District. In this study, The Institute first examined the Barnett Shale in Texas, where thenatural gas industry has aided the Dallas/Fort Worth economy in remaining nearly recession-proof.There, production has resulted in $11.1 billion in annual output, and 100,268 permanent jobs. 3 Next,The Institute studied the Fayetteville Shale in Arkansas. Although more recent than the Barnett Shale,the Fayetteville Shale play has already both improved employment and considerably contributed to thestate’s local economies. Projections indicate that the Fayetteville Shale play will result in majorpopulation increases and significant employment gains through 2025.Finally, The Institute examined the potential effects of NEPA’s Marcellus Shale play. When The Institutefirst examined Marcellus Shale activity in 2008, we reported that 93 drilling permits had been issued and18 wells drilled in Pennsylvania’s Bradford, Lycoming, Susquehanna and Wayne Counties. As an update,as of September 2012, 4,823 drilling permits have been issued and 4,026 wells have been drilled inBradford, Lycoming, Sullivan, Susquehanna and Wyoming Counties. In 2011, more than 2 Tcf of naturalgas production in Bradford, Lycoming and Susquehanna County was reported to the PennsylvaniaDepartment of Environmental Protection.The Institute has found considerable possibilities for growth within Pennsylvania’s 10th CongressionalDistrict, and some counties have already begun to see some of the effects of the Marcellus Shale drilling.Although this exploration is still in early development, the case study comparisons of different regionsallow us to conclude that there is definite potential for growth in wealth, employment, and housingwithin the 10th Congressional District. There are many companies that are currently invested in thegrowth of the Marcellus Shale and its natural gas supply, but we can only see the effects as more energycompanies come to the region. Since the 10th Congressional District is comprised of adjacent counties inaddition to the core counties, there must be considerable strategic economic development initiatives inplace to ensure that there is direct economic benefit in addition to any spill over from the core drillingcounties.1 http://www.eia.gov/dnav/ng/ng_prod_shalegas_s1_a.htm2 http://www.post-gazette.com/stories/local/state/marcellus-shale-gas-estimate-plummets-219007/3 http://www.fortworthchamber.com/BarnettShaleStudy11.pdf 3|Page
  • 4. IntroductionNEPA has always been a source of economic and industrial change, particularly when observing the coalmining industry and its regional influence. At one time, Pennsylvania coal mining was a keystone of theregion’s economy. For decades after coal mining’s decline, the region experienced population decreases,and maintained low wages and a suffering job market. Today, NEPA is progressing; population isincreasing and businesses are coming into the area. Additionally, the region is faced with the possibilityof a new natural resource phenomenon: natural gas found in Marcellus Shale deposits.As expected, area residents are both curious and concerned about the potential impacts of natural gasdrilling. Increasing local and national media attention has focused on area land owners signing overleasing rights to energy companies, the high prices these companies are paying for such rights, potentialenvironmental issues, economic development, less reliance on foreign oil and energy sources and anendless list of other potential opportunities and issues.Published in May 2008, The Institute’s original study evaluated the prospective impact of land leasingand drilling of Marcellus Shale deposits, with particular emphasis on banking. It also examined otherregions in the U.S that have been affected by natural gas plays. Using publicly available data TheInstitute examined the possibility of Marcellus Shale deposits in the counties comprising Pennsylvania’s10th Congressional District.This document provides an update to our original study, based on newly recorded data. Furthermore, itutilizes case study methodology to compare some area demographic and economic indicators in NEPAwith other regions that have already experienced similar situations.Research Methods & LimitationsThis report uses secondary data from federal, private, state and non-profit sources. The report is limitedto an explanation of the data and trends. General scans were completed to identify potential significantevents in the communities researched. No claim is made that natural gas drilling is the complete andsole reason for economic growth in any region. There is no economic analysis of the impact of therecession on any of the communities presented in this paper. 4|Page
  • 5. CASE STUDIES THE I MPACT OF OTHER U NCONVEN TI AL S HAL E GAS BASIN S THROU GHOU T THE U.S .These case studies examine the economic impact of various types of natural gas producing shale. Thepurpose is to reveal the natural gas industry’s potential impact on NEPA. Although case studies do notallow us to make an exact assumption or prediction of what will occur in NEPA, they offer a glimpse intopossibilities and demonstrate lessons learned. 5|Page
  • 6. Case Study:BARNETT SHALE & DENTON COUNTY, TEXASBARNETT SHALEThe Barnett Shale, located in the Dallas/Fort Worth area, is a hydrocarbon-producing geologicalformation of great economic significance. Discovered in 1981 by Mitchell Energy, it consists ofsedimentary rock. The productive part of the formation is estimated to stretch west and south from theCity of Dallas, covering 5,000 square miles and at least eighteen counties. 4 It is the nation’s secondlargest producing on-shore domestic natural gas field, and one of the country’s largest gas productionregions.According to an economic impact analysis of the Barnett Shale, total natural gas production has grownsharply in recent years and, in 2011, accounted for 31 percent of the state’s total production, a 19percent increase from 2006. The development has produced a substantial number of businesses, leadingto the creation of jobs and economic opportunities for thousands of area residents and companies.Additionally, retail sales taxes, occupancy taxes, and other sources of fiscal revenue have increased, asthe enhanced level of aggregate performance spans a broad spectrum of sectors. 5According to the Texas Railroad Commission (the independent state agency that regulates Texas’ energyindustry, including the Barnett Shale drilling), the Barnett shale play encompasses four core counties,including Denton, Johnson, Tarrant and Wise, and 21 non-core counties. There are 24 counties withproducing wells, as presented below and 25 counties where permits are issued. Figure 1: Counties with Existing Wells Source: Texas Railroad Commission4 http://www.rrc.state.tx.us/barnettshale/index.html5 Bounty from Below 6|Page
  • 7. Economic ImpactActivity in the Barnett Shale generates billions of dollars in investments and thousands of jobs. Royaltyand bonus payments to area residents, cities, school districts, and others continue to rise, as do propertytax receipts to local taxing authorities. Texas production has since resulted in $11.1 billion in annualoutput, and 100,268 permanent jobs. 6 The Fort Worth Chamber of Commerce estimates that theBarnett Shale activity is responsible for approximately 38.5 percent of the area’s growth over the pastdecade. 7Improvements in recovery techniques have provided an ample increase in activity over the past severalyears. Figure 4 demonstrates the Barnett Shale’s rapid production growth over a nineteen-year period.In 2011, it was estimated that counties, cities, and school districts received $730.6 million in additionalfiscal revenues due to the Barnett Shale activity. Counties in the Barnett Shale area have seen a 1,642percent increase in fiscal revenues between 2001 and 2011. 8 In addition, it was estimated that the statereceived an additional $911.8 million in taxes. The total gain in state and local tax revenue due to theBarnett Shale activity is estimated to be $1.6 billion. 9The overall effects of the Barnett Shale activity are likely to account for an average of more than108,000 jobs and $10.4 billion in output per year through 2015. Such impacts are noteworthy, even inthe region’s large and diverse economy.The Barnett Shale natural gas industry has had a ripple effect on many business activities, including, forexample, the creation of 100,268 jobs. 10 The industry has also increased gross product and personalincome. The Fort Worth Chamber of Commerce estimates that the Barnett shale adds $11.1 billion inannual output to the region. Personal income across the Barnett Shale area is 8.5 percent higher than itwould be without the shale activity. 116 http://www.fortworthchamber.com/BarnettShaleStudy11.pdf7 Ibid.8 Ibid.9 Ibid.10 http://www.fortworthchamber.com/BarnettShaleStudy11.pdf11 Ibid. 7|Page
  • 8. Drilling and ProductionProduction in the Barnett Shale has grown significantly since 1990. In 2011, over 1,900 Bcf of natural gaswere produced. Like the Marcellus Shale, the Barnett Shale activity includes both horizontal and verticalwells. Figure 2: Barnett Shale Gas Well Production 1993-2011 Source: Texas Railroad CommissionThe number of permits issued hit an all-time high in 2008, but began to drop in 2011 as exploration andproduction slowed down to the cost of gas. More broadly, natural gas drilling in all shale plays hasdecreased due to the low price of natural gas in the market. As U.S. demand for natural gas increases,due to increased use of natural gas fueled vehicles, fueling stations, business and residentialconversions, pipeline system expansions and potential exports of liquefied natural gas, such demand willcause the price to rise and drilling activity to increase. Figure 3: Drilling Permits Issued in Barnett Shale 1993- April 2012 Source: Texas Railroad Commission 8|Page
  • 9. DENTON COUNTY, TEXASDenton County is part of the Dallas/Fort Worth, Texas, metropolitan area. It is a reasonably sized countythat has encountered incredible growth since the mid-nineties, when the Barnett Shale was introduced.This county is used as a case study because of its similarities to the collective group of counties locatedwithin Pennsylvania’s 10th Congressional District.In 2004, Denton County’s population reached 528,950 and 1,460 wells provided the county with mineralrevenue of more than $2.7 million. In 2010, Denton County’s population increased to 662,614, a 26percent increase over 2004. 12 In addition to state and local regulations facilitating natural gas drillingand production, a variety of factors contributed to Denton County’s significant growth. Denton County ispart of the Dallas-Fort Worth metro area and therefore benefits from the attributes of the cities andtheir surrounding growth.This case study examines Denton County’s population, economic, and social data at four time periods:1990, 2000, 2006, and 2010 – the most recent data available.PopulationThe Barnett Shale has greatly contributed to Denton County’s growing population, which has more thandoubled since 1990. Figure 4: Denton County Population Source: US Census BureauIncomeDenton County experienced remarkable growth in median household income, with the greatest increaseoccurring in the $100,000 - $149,999 income range. In 1990, just three percent of households in thecounty fell into this income bracket, and by 2010, that rose to more than nineteen percent.12 2010 Census 9|Page
  • 10. Figure 5: Denton County Household Income 1990-2010 Source: US Census Bureau The county’s median income also grew, reaching nearly $70,000 in 2010 – almost double that in 1990. In 2000, Denton County’s median income was $58, 216, which increased by 20 percent between 2000 and 2010. Figure 6: Denton County Median Income 1990-2010 Source: US Census Bureau Denton County residents saw a 386 percent increase in wages and salaries between 1990 and 2009. Dividends before exclusions grew by 393 percent and interest by 56 percent Table 1: Denton County Tax Return Data 1900 – 2009 Number of Number of Adjusted Wages & Dividends Before Interest Gross Rent Returns Exemptions Income Salaries Exclusions Received & Royalties1990 92,235 219,385 $3,432,829 $3,005,711 $29,004 $151,178 89,0912000 163,704 373,348 $10,831,294 $9,019,378 $110,453 $198,085 168,3742005 209,681 488,001 $14,171,829 $12,072,937 $123,211 $182,459 N/A2009 247,679 576,006 $16,970,898 $14,619,805 $142,951 $235,428 N/APercentageChange 168.5% 162.5% 394.4% 386.4% 392.8% 55.7% N/A2000-2009 Source: IRS (Number in Thousands) 10 | P a g e
  • 11. EmploymentIn the 20-year time span examined, the county’s labor force doubled from 169,309 in 1990 to 376,227 in2010. While the county’s unemployment rate increased to 7.3 percent in 2010 due to the economicrecession, it remained more than two percentage points less than the 2010 national average. Table 2: Denton County Employment 1990-2010 1990 2000 2006 2010 Labor Force 169,309 248,592 336,939 376,227 Employment 162,249 239,154 317,016 348,902 Unemployment 7.060 9,438 19,923 27,325 Unemployment Rate 4.2% 2.90% 5.90% 7.30% Source: US Census BureauHousingDenton County’s number of owner-occupied housing units soared from 48,766 in 1990 to 135,650 in2006 – a 178 percent increase. In 2010, the county recorded a total of 156,864 owner-occupied homes,an increase of 222 percent since 1990. Median home values also increased significantly over the timeperiod examined. Figure 7: Denton County Median Home Values 1990-2010 Source: US Census Bureau 11 | P a g e
  • 12. Case Study:FAYETTEVILLE SHALE & FAULKNER COUNTY, ARKANSAS /WHITE COUNTY, ARKANSASFAYETTEVILLE SHALEThe Fayetteville Shale provides for an unusual natural gas reservoir situated on the Arkansas side of theArkoma Basin, ranging in thickness from 50 to 325 feet and in depth from 1,500 to 6,500 feet. Directeconomic activity connected with the development of the Fayetteville Shale includes exploration,extraction, production, transportation, storage and distribution. 13 Figure 8: Arkansas Counties Involved in the Fayetteville Shale Play Source: Geology.comThe Fayetteville Shale is a recently tapped natural gas source. The "sweet spot," where geologistsbelieve the rock holds the greatest natural gas reserve, spans five central Arkansas counties, includingCleburne, Conway, Faulkner, Van Buren and White. 14 In 2002, Houston-based Southwestern Energybegan natural gas exploration in Arkansas. The company holds mineral rights on 925,842 acres of the13 Arkansas Oil and Gas Commission14 http://cleburnecountyarkansas.com.hosting.domaindirect.com/id10.html 12 | P a g e
  • 13. Fayetteville Shale land. In 2011, the company’s net production in the Fayetteville Shale play was 436.8Bcf. In 2012, the company will invest $1.1 billion to develop more wells within this play. 15According to a University of Arkansas study, “Exploration and production activities related to theFayetteville Shale from 2008 to 2011 generated more than $18.5 billion in total economic activity. Totalannual state employment from Fayetteville Shale activity increased from 14,500 to more than 22,000from 2008 to 2011.” 16The study indicates that the play resulted in nearly $2 billion in state and local permit fees and taxescollected. Specifically, the study stated, “4,878 drilling permits were issued in Fayetteville Shale countiesby the Arkansas Oil and Gas Commission, generating fees to the state of almost $1.5 million, and thestate received more than $90.8 million in severance tax revenues from activity in the region.” 17In the 2001 to 2010 time period, 818 new business establishments were created in Arkansas’ FaulknerCounty. Between 2006 and 2011, local taxable sales increased 23.3 percent, compared with the stateincrease of only 5.7 percent. 18FAULKNER COUNTY, ARKANSASFaulkner County’s largest industries by employment include: trade, transportation, and utilities (18.2percent); government (16.9 percent); education and health services (15.2 percent); and professional andbusiness services (14.8 percent). Between September 2010 and September 2011, the county’s miningand natural resources industry created 738 new jobs. In February 2012, Faulkner County had anunemployment rate of 7.5 percent, which was considerably less than the state’s average unemploymentrate of 8.3 percent in that same month. 19PopulationBetween 1990 and 2010, Faulkner County’s population increased by nearly 90 percent. As of July 2011,116,342 people live in Faulkner County, an increase of about a 35 percent since 2000. 20 Figure 9: Faulkner County Population 1990-2010 Source: US Census Bureau15 http://www.swn.com/operations/Pages/fayettevilleshale.aspx16 http://newswire.uark.edu/article.aspx?id=1855817 Ibid18 http://www.swn.com/operations/Pages/fayettevilleshale.aspx19 Ibid.20 Ibid 13 | P a g e
  • 14. IncomeFaulkner County experienced an incredible increase in household income. From 1990 to 2010, thenumber of residents falling within the county’s $100,000 to $149,999 income bracket grew 175percent.21 In addition, median income also rose from $23,663 in 1990 to $43,033 in 2010. Figure 1: Faulkner County Household Income 1990-2010 Source: US Census Bureau Figure 112: Median Income Faulkner County 1990-2010 Source: US Census Bureau21 Census Bureau 14 | P a g e
  • 15. Wages and salaries increased by 261 percent between 1990 and 2009. Table 5: Faulkner County Tax Return Data Number of Number of Adjusted Wages & Dividends Before Interest Gross Rents Returns Exemptions Income Salaries Exclusions Received & Royalties1990 20,814 49,635 $551,153 $449,095 $4,930 $29,262 $18,9032000 32,498 74,563 $1,376,962 $1,099,476 $14,083 $37,050 $30,0452005 35,624 80,670 $1,680,270 $1,314,348 $15,889 $27,603 N/A2009 40,679 90,790 $2,021,964 $1,623,114 $12,418 $30,436 N/APercentageChange 48.8% 82.9% 266.8% 261.4% 151.8% 4% N/A1990-2009 Source: IRS (Number in Thousands)EmploymentThe county’s labor force nearly doubled over the 20 years examined, from 31,913 in 1990 to 57,416 in2010. Although it remains below the 8.3 percent state average and 9.6 percent national average, thecounty’s unemployment rate grew to 7.5 percent in 2010. Faulkner County has reported increasedretail, hotel and restaurant sales. 22 Table 6: Faulkner County Employment Data 1990 2000 2006 2010 Labor Force 31,913 45,335 49,014 57,416 Employment 29,618 43,704 46,615 53,088 Unemployment 2,295 1,631 2,399 4,328 Unemployment Rate 7.2% 3.6% 4.9% 7.5% Source: US Census BureauHousingAlong with increased employment and incomes, the county’s home values also rose. Between 1990 and2010, Faulkner County’s median home value more than doubled. Figure 3: Median Home Value in Faulkner County 1990-2010 Source: US Census Bureau22 http://cber.uark.edu/Revisiting_the_Economic_Impact_of_the_Fayetteville_Shale.pdf 15 | P a g e
  • 16. WHITE COUNTY, ARKANSASPopulationDue to the Fayetteville Shale activities, Arkansas’ White County has experienced some of the sameeffects detailed in the previous case study. Between 1990 and 2010, the county’s population grew from54,676 to 77,350 – a nearly 42 percent increase. Figure 4: White County Population 1990-2010 Source: US Census BureauIncomeWhite County also experienced a rise in income over the period studied. The following graph shows arise in households, as well as in household income from 1990 through 2010. Significant is that, between1990 and 2010, the number of households earning $34,999 and less decreased. Figure 5: White County Household Income 1990-2010 Source: US Census Bureau 16 | P a g e
  • 17. Figure 6: White County Median Household Income 1990-2010 Source: US Census Bureau Also between 1990 and 2009, White County’s wages and salaries increased by 161 percent and adjusted gross incomes grew by 169 percent. Table 7: White County Tax Return Data Number of Number of Adjusted Wages & Dividends Before Interest Gross Rents & Returns Exemptions Income Salaries Exclusions Received Royalties1900 19,351 46,191 $442,316 $350,362 $4,561 $30,186 $14,3992000 22,493 51,458 $787,262 $608,403 $8,543 $31,430 $24,0062005 24,962 57,802 $983,765 $754,359 $11,254 $22,4992009 27,277 62,316 $1,187,893 $913,855 $9,592 $27,403 N/APercentageChange 40.9% 34.9% 168.5% 160.8% 110.3% -61% N/A1990-2009 Source: IRS (Numbers in thousands) Employment The county’s labor force nearly doubled from 26,310 in 1990 to 35,478 in 2010, while its unemployment rate decreased to 4.6 percent in 2010 – which represents half of the county’s unemployment rate in 1990 and half the U.S. rate in 2010. Table 8: White County Employment Data 1990 2000 2006 2010 Labor Force 26,310 30,893 34,261 35,478 Employment 23,772 29,436 32,493 32,572 Unemployment 2,528 1,457 1,768 2,788 Unemployment 9.60% 4.70% 5.20% 4.60% Rate Source: US Census Bureau 17 | P a g e
  • 18. HousingAlthough White County reported a slight decline in home values between 2006 and 2010, overall, homevalues increased significantly since 1990. Figure 7: White County Median Home Values 1990-2010 18 | P a g e
  • 19. Impact on Northeastern PennsylvaniaPast studies by the U.S. Geological Survey determined that the Marcellus Shale contains anestimated undiscovered resource of about 1.9 Tcf. 23 More recent estimates indicate that 141Tcf of natural gas can be recovered from the formation.24Figures 17 and 18 below show the extent and depth of the Marcellus Shale in New York, Ohio,Pennsylvania and West Virginia. Figure 87: The Distribution of Shale in the Appalachian Basin Source: AAPG Figure 18: The Depth of Shale in the Appalachian Basin Source: AAPG23 http://geology.com/articles/marcellus-shale.shtml24 http://www.bloomberg.com/news/2012-01-23/u-s-reduces-marcellus-shale-gas-reserve-estimate-by-66-on-revised-data.html 19 | P a g e
  • 20. WellsSince The Institute last studied the Marcellus Shale, major industry growth has occurred. In2008, there were a handful of wells drilled in the region; today, there are hundreds.The following section details the top five companies operating in each county and the numberof wells they are operating as of July 2012. All data were retrieved from the PennsylvaniaDepartment of Environmental Protection.Bradford County contains the most wells drilled of any county in Pennsylvania’s 10thCongressional District. Chesapeake Appalachia, LLC operates 929 of the county’s 1,830 wells. Figure 9: Wells Drilled by Company in Bradford County Source: PA DEPAnadarko Exploration and Production Company operates 386 of Lycoming County’s 932 wells,which makes Anadarko the county’s leading driller. Figure 10: Wells Drilled By Company in Lycoming County Source: PA DEP 20 | P a g e
  • 21. Chesapeake Appalachia, LLC operates 123 of 161 wells in Sullivan County, making it the county’s topoperator. Figure 11: Wells Drilled By Company in Sullivan County Source: PA DEPCabot Oil & Gas Corp is Susquehanna County’s top driller. Cabot drilled 344 of the county’s 839 wells. Figure 12: Wells Drilled By Company in Susquehanna County Source: PA DEPIn Wyoming County, Chesapeake Appalachia, again, operates the most wells. The company drilled 115of the county’s 191 wells. 21 | P a g e
  • 22. Figure 13: Wells Drilled By Company in Wyoming County Source: PA DEPOver the past three years, there has been tremendous growth in both the number of wells drilled andthe number of drilling permits issued in the 10th Congressional District. Bradford County has the highestnumbers in both categories, but Lycoming and Susquehanna Counties have shown impressive growth.In 2008, Pennsylvania imported 75 percent of its natural gas.The Pennsylvania Independent Oil and Gas Association predicts that by 2014, the state will be a netexporter of natural gas. 25 The association also estimates that Marcellus Shale activity added $10.1 billionin total economic output and $1 billion in tax revenue throughout Pennsylvania in 2011. 26 Figure 14: Wells Drilled in Top 5 Counties in the District 2009-2011 Source: Pittsburgh Today25 http://www.pioga.org/marcellus-shale/26 http://www.pioga.org/marcellus-shale/ 22 | P a g e
  • 23. Figure 15: Marcellus Shale Drilling Permits Issued in the 10th Congressional District 2008-2011 Source: Pittsburgh TodayStudy AreaSince The Institute last examined the 10th Congressional District’s demographic and income data, someredistricting has occurred throughout the years. Although many of the same counties are located in thedistrict, as indicated on the map below, the 2000 Census expanded the district slightly and the 2010Census will expand it even further. The data presented is from the 2010 Census and is, therefore,compared with historical data published in this report. Figure 16: 10th Congressional District Changes as a Result of the Census 23 | P a g e
  • 24. PopulationThe population statistics below reflect an 18 percent increase for the entire 10th Congressional Districtfrom 1990 to 2010. It may be assumed that such increase is due to an increase in job availability —attributable to the new industry. Also, natural gas exploration produced numerous ancillary jobs, and,given that re-districting between the 1990 and 2000 Censuses essentially changed the composition ofthe 10th Congressional District, the change from 2000 to 2006 is negligible. In the four years between2006 and 2010, however, the district’s population increased 3 percent —from 649,330 to 670,356. Figure 27: 10th Congressional District Population 1990-2010 Source: US Census BureauIncomeHousehold income also increased within this period. In 2010, there were more than five times as manyhouseholds with incomes of $150,000 or more than in 1990. During the same period, the district’smedian income grew from $25,648 to $44,684 – a 74 percent increase. Households earning less than$34,999 decreased during the period. Figure 28: 10th Congressional District Household Income 1990-2010 Source: US Census Bureau 24 | P a g e
  • 25. Figure 17: 10th Congressional District Median Income 1990-2010 Source: US Census BureauHousingMedian housing prices jumped from $70,600 to $146,400 - a 100 percent increase over the 20-yearperiod. Despite the country’s economic recession, housing values increased 18 percent from 2006 to2010. The Institute completed a housing study profiling many of the counties within the 10thCongressional District on behalf of the Appalachian Regional Commission. The study found that, due to avariety of circumstances, including the development of the Marcellus Shale, a housing shortage existedin the core counties, thus home values increased significantly. Housing values in the district’s non-drilling counties remained level or decreased. Figure 30: 10th Congressional District Median Home Values 1990-2010 Source: US Census Bureau 25 | P a g e
  • 26. EmploymentEmployment data for the 10th Congressional District are presented below. In 2006, before shale drillingand before the recession, the U.S. unemployment rate was 4.6 percent and by 2010, the U.S. rate was9.6 percent. The 10th Congressional District, however was at 6.4 percent or approximately 2 percenthigher in 2006 before the recession and before Marcellus drilling. However, by 2010 when the rest ofthe nation had higher unemployment, the 10th Congressional District was at 8.8 percent – almost a fullpercentage point lower than the U.S. average. Table 10: 10th Congressional District Employment 2006 2010 Labor Force 322,807 330,229 Employed 302,190 329,887 Unemployed 20,617 28,990 Unemployment Rate 6.4% 8.8%Employment data is presented by showing data by county for several counties within the 10thCongressional District. The counties include two core drilling counties and two counties with no drilling.While Susquehanna and Bradford Counties showed some unemployment increases in 2010 due togeneral economic conditions, such increases were nowhere close to unemployment rates in Lackawannaand Luzerne Counties, the two non-drilling counties, where unemployment rates are much higher thanboth the drilling counties and the national average of 9.6 percent. By 2011, Bradford County’sunemployment rate was 5.9 percent and Susquehanna County’s was 7.6 percent, compared with 9.1percent in Lackawanna County, 9.4 percent in Luzerne County and 9 percent nationwide. Table 11: Susquehanna County Employment 1990 2000 2006 2010 Labor Force 20,362 22,370 21,401 22,370 Employment 16,987 19,559 20,383 20,477 Unemployment 1,240 803 1,018 1,893 Unemployment 6.80% 3.90% 4.80% 8.50% Rate Source: US Bureau of Labor Statistics Table 12: Bradford County Employment 1990 2000 2006 2010 Labor Force 28,149 30,243 30,749 33,249 Employment 26,555 29,144 29,312 31,015 Unemployment 1,594 1,099 1,437 2,234 Unemployment 5.70% 3.60% 4.70% 6.70% Rate Source: US Bureau of Labor Statistics 26 | P a g e
  • 27. Table 13: Lackawanna County Employment 1990 2000 2006 2010 Labor Force 106,094 103,664 106,176 106,900 Employment 98,542 98,973 101,009 97,174 Unemployment 7,552 4,691 5,167 9,726 Unemployment 7.1% 4.5% 4.9% 9.1% Rate Source: US Bureau of Labor Statistics Table 14: Luzerne County Employment 1990 2000 2006 2010 Labor Force 169,730 168,450 171,789 160,670 Employment 156,983 159,736 162,604 156,857 Unemployment 11,767 8,043 9,185 15,879 Unemployment 7.50% 5.20% 5.30% 9.90% Rate Source: US Bureau of Labor StatisticsConclusionThe purpose of this study is to analyze the potential impact of drilling of Marcellus Shale deposits onvarious demographic and economic indicators. The study also aims to supply a detailed comparison ofother similar regions in the country that have first hand knowledge of such increases in population andwealth due to natural gas drilling in shale deposits.By updating this study with the most recent information from 2011, the Institute can further assess thechanges taking place throughout the counties and states that partake in shale deposit drilling.Furthermore, such information can be used as a model for a successful new industry in Pennsylvania,specifically in the 10th Congressional District. The challenge is that there are several core drilling countiesin the 10th Congressional District, as well as other “adjacent” counties. When the indicators arepresented by county, it is apparent that the core drilling counties are performing better than the non-core drilling counties.In Case Study 1, the Institute found that since 2006, the Barnett Shale well production has increasedsteadily since 2006. In addition, Denton County, Texas, saw its population more than double since 1990.The county also experienced remarkable growth in both household income and occupied housingvalues. Denton, like northeast Pennsylvania has a strong higher education infrastructure and rural areasvery similar to the 10th Congressional District.In Case Study 2, we found that the population in Faulkner County, Arkansas, has increased 90 percent inthe past 20 years due to natural gas exploration in the Fayetteville Shale. As is the case in the previouscase study, Faulkner County also recorded a substantial increase in household and median income.Homeownership rates also increased by a remarkable 172 percent over the 20 examined. White County,Arkansas, showed similar growth, but on a much smaller scale. The county’s population increased 30 27 | P a g e
  • 28. percent over the 20 years, while there were additional increases in income and housing values. TheArkansas Counties bear more resemblance to the 10th Congressional District. They are areas that havesuffered population loss, have many rural components and a few urban communities, albeit none like inTexas.Data presented for the 10th Congressional District showed how a region suffering from population lossand job loss began to display economic growth and strength at time when other parts of the countrywere in a severe recession. However, more detailed analysis of employment data show an area dividedby core drilling counties and non-drilling counties, which further magnifies drilling impacts. This is not tosay, however, that the non-drilling counties cannot or will not see future benefit. Like Denton County,Texas, other parts of the 10th Congressional District have a strong higher education infrastructure andrepresent the region’s more urban communities. Aside from assets like schools and airports, thesurrounding counties can benefit by focusing economic development on the continued development oflocal businesses needed by the natural gas industry as a whole, and working to bring in new businessesthat use natural gas in their processes. The ongoing pipeline development permits this kind of strategy.The Institute has found considerable possibilities for growth within Pennsylvania’s 10th CongressionalDistrict, and some counties have already begun to see some of the effects of the Marcellus Shale drilling.Although this exploration is still in early development, the case study comparisons of different regionsallow us to conclude that there is definite potential for growth in wealth, employment, and housingwithin the 10th Congressional District. There are many companies that are currently invested in thegrowth of the Marcellus Shale and its natural gas supply, but we can only see the effects as more energycompanies come to the region. As this industry grows, we will begin to see the impact it has on NEPA’seconomy. Since the 10th Congressional District is comprised of adjacent counties in addition to the corecounties, there must be considerable strategic economic development initiatives in place to ensure thatthere is direct economic benefit in addition to any spill over from the core drilling counties.There is a clear advantage to natural gas drilling in the Marcellus Shale, but there will certainly bechallenges in the process. The opportunity exists; now, it is a matter of time until we can truly analyze itsimportance and impact. 28 | P a g e